Virtual cards help improve expense management for businesses. This article breaks down the benefits and uses of business virtual cards.
How to Manage Company Credit Cards: Tips and Best Practices
Using company credit cards is an efficient way for employees to make business purchases. Learn how to manage them responsibly to avoid overspending.
Company credit cards are an efficient way for employees to make purchases on the company’s behalf. It’s not hard to see why these cards are also becoming necessary in the business world.
Using company credit cards streamlines the buying process, helps minimise unnecessary purchases, and efficiently tracks business spending.
However, there are drawbacks to issuing a company credit card–it can lead to overspending and abuse, which can be costly and can even lead to bankruptcy if left unchecked.
Hence, it is crucial to manage company credit cards well and handle them responsibly. Read on to learn how to better use company credit cards.
4 Best Practices to Manage Company Credit Cards
These tips and best practices can come in handy if you’re interested in knowing how to manage company credit cards.
1. Provide clear purchasing guidelines
Clear purchasing guidelines are essential for employees to understand how, where, and when to use company credit cards. Employees issued with company credit cards should have a clear idea of what purchases can and cannot be made with the cards, which employees normally see in a company’s expense policy.
2. Set spending limits and purchase categories
Employees who have access to cards with unlimited spending may easily get carried away and spend more than they should. Setting spending limits and purchase categories can prevent this from happening.
Some business cards like Spenmo’s corporate cards include features that enable you to set card limits and merchant locks to control company spending while categorising card transactions to their correct expense category.
3. Monitor all purchases
Monitoring purchases allows you to assess which items take up the most of your finances. You can then determine which categories you can cut spending on. This strategy can ultimately help you adjust your budget to fit your company’s current financial standing. An expense management software can be a great tool to track and analyse your business expenses.
4. Provide credit cards only when necessary
Limiting the issuance of company credit cards helps reduce the risk of fund mismanagement. Providing credit cards only when necessary also makes it easy to manage your company’s cash flow since you deal with fewer accounts. This strategy is particularly helpful for smaller businesses that are short on cash but need to make business purchases.
How to Manage Company Credit Cards: 4 Top Tips
It’s easy to get caught up in the daily grind of running a business. However, you must stay on top of your company’s finances to ensure a financially healthy business. Here are tips to help you manage company credit cards effectively.
1. Set spending alerts
Setting spending alerts from your mobile phone or desktop is an effective way to monitor your business expenses and control company spending. Try enabling push notifications that inform you about the state of your credit card accounts. For instance, you may select alerts for credit score changes, payment due dates, or updates on your spending limit.
2. Create an accountability system
Promote an accountability system with a focus on preventing expense reimbursement fraud. There’s always a risk of fund mismanagement when an employee is issued a company credit card. Implementing policies that make the holder responsible for unauthorised spending will help minimise credit card abuse.
For instance, you may require that the company only pay the approved card amount and that the employee must pay unauthorised expenses. This will send a message to cardholders to use the cards responsibly.
3. Designate someone to oversee the reimbursement process
Have someone monitor the expense reimbursement process to ensure that policies are being followed and that paperwork is done correctly. They can also be in charge of cancelling company credit cards for employees who have left the company.
4. Double-check the purchases
Be sure to double-check expense reports before approving them. Always ask for proof of purchase like receipts and verify if the purchase was authorised by management.
Also, check if the purchases were charged correctly. Using receipt tracking software like Spenmo can help speed up your expense management workflow and efficiently monitor all your business transactions.
Keeping Everything in Check
Efficient management of company credit cards is an important part of maintaining your company’s financial health. This entails setting clear purchasing guidelines and spending limits, expense monitoring, and establishing an accountability system.
Consider using Spenmo’s corporate cards to streamline your expense management process. Our physical and virtual cards include enhanced controls for managers to easily enable and disable cards issued to employees and lock card use to specific merchants.
Managers can also set spending limits while having visibility of employee card spending. Moreover, the automated expense categorisation functionality can help with your company’s bookkeeping process.
Book a demo today to learn more about Spenmo’s corporate cards!
*Disclaimer: This article is for general education purposes only. Spenmo does not make any representation, assurance, or warranty, express or implied, as to its services or products offered in this article. For the avoidance of doubt, Spenmo does not purport to issue any credit cards and issues only business corporate cards, which function as debit cards.